land Novelties, Inc., of Palau makes two products-Hawaiian Fantasy and Tahitian Joy. Each product's selling price, variable expense er unit, and annual sales volume are as follows: Selling price per unit Variable expense per unit Number of units sold annually. Hawaiian Fantasy 20 9 22,000 $ Tahitian Joy $ $ 110 33 6,000 ixed expenses total $664,000 per year. equired: Assuming the sales mix given above, do the following: Prepare a contribution format income statement showing both dollar and percent columns for each product and for the company as whole. . Compute the company's break-even point in dollar sales. Also, compute its margin of safety in dollars and its margin of safety ercentage. . The company has developed a new product called Samoan Delight that sells for $30 each and that has variable expenses of $24 er unit. If the company can sell 22,000 units of Samoan Delight without incurring any additional fixed expenses: Prepare a revised contribution format income statement that includes Samoan Delight. Assume that sales of the other two products oes not change. Compute the company's revised break-even point in dollar sales. Also, compute its revised margin of safety in dollars and margin of afety percentage.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Island Novelties, Inc., of Palau makes two products-Hawaiian Fantasy and Tahitian Joy. Each product's selling price, variable expense
per unit, and annual sales volume are as follows:
Selling price per unit
Variable expense per unit
Number of units sold annually
Hawaiian
Fantasy
20
9
22,000
$
$
Tahitian
Joy
$
$
110
33
6,000
Fixed expenses total $664,000 per year.
Required:
1. Assuming the sales mix given above, do the following:
a. Prepare a contribution format income statement showing both dollar and percent columns for each product and for the company as
a whole.
b. Compute the company's break-even point in dollar sales. Also, compute its margin of safety in dollars and its margin of safety
percentage.
2. The company has developed a new product called Samoan Delight that sells for $30 each and that has variable expenses of $24
per unit. If the company can sell 22,000 units of Samoan Delight without incurring any additional fixed expenses:
a. Prepare a revised contribution format income statement that includes Samoan Delight. Assume that sales of the other two products
does not change.
b. Compute the company's revised break-even point in dollar sales. Also, compute its revised margin of safety in dollars and margin of
safety percentage.
Transcribed Image Text:Island Novelties, Inc., of Palau makes two products-Hawaiian Fantasy and Tahitian Joy. Each product's selling price, variable expense per unit, and annual sales volume are as follows: Selling price per unit Variable expense per unit Number of units sold annually Hawaiian Fantasy 20 9 22,000 $ $ Tahitian Joy $ $ 110 33 6,000 Fixed expenses total $664,000 per year. Required: 1. Assuming the sales mix given above, do the following: a. Prepare a contribution format income statement showing both dollar and percent columns for each product and for the company as a whole. b. Compute the company's break-even point in dollar sales. Also, compute its margin of safety in dollars and its margin of safety percentage. 2. The company has developed a new product called Samoan Delight that sells for $30 each and that has variable expenses of $24 per unit. If the company can sell 22,000 units of Samoan Delight without incurring any additional fixed expenses: a. Prepare a revised contribution format income statement that includes Samoan Delight. Assume that sales of the other two products does not change. b. Compute the company's revised break-even point in dollar sales. Also, compute its revised margin of safety in dollars and margin of safety percentage.
Complete this question by entering your answers in the tabs below.
Req 1A
Req 1B
Req 2A
Req 2B
Assuming the sales mix given above, prepare a contribution format income statement showing both dollar and percent columns for e
for the company as a whole.
$
Island Novelties, Inc.,
Contribution Income Statement
Hawaiian Fantasy
Amount
%
0
%
%
0% $
< Req 1A
Tahitian Joy
Amount
%
0
%
%
0 %
Req 1B >
Total
Amount
0
0
%
%
%
0 %
Transcribed Image Text:Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2A Req 2B Assuming the sales mix given above, prepare a contribution format income statement showing both dollar and percent columns for e for the company as a whole. $ Island Novelties, Inc., Contribution Income Statement Hawaiian Fantasy Amount % 0 % % 0% $ < Req 1A Tahitian Joy Amount % 0 % % 0 % Req 1B > Total Amount 0 0 % % % 0 %
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